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Saudi Aramco, the world's biggest oil producer, and US-based National Oilwell Varco (NOV) formed a joint venture partnership to establish an integrated world-class on-shore rig and equipment manufacturing and aftermarket facility in Ras Al Khair in Saudi Arabia, the kingdom's oil giant said on Thursday.

Under the agreement, Aramco will own 30 per cent of the joint venture’s shares, while NOV will own the remaining 70 per cent.

“The kingdom leadership’s efforts to accelerate economic diversification as part of Vision 2030 is having a significant impact in enabling the creation of new sub-sectors and also in attracting investments from our international partners to our nation’s vital oil and gas industry," said Amin Nasser, Saudi Aramco’s President and CEO.

He described the JV as a step towards the creation of a vibrant energy services sector and will expand the procurement of locally manufactured goods and services alongside the development of giga projects such as the King Salman International Complex for Maritime Industries and Services.

International Maritime Industries (IMI), its joint venture with Lamprell, the National Shipping Company and Hyundai Heavy Industries Company to build multibillion-dollar maritime yard in the kingdom, is expected to be fully operational in 2022.

“The new manufacturing facility will further strengthen the integrated portfolio of oil field services and equipment being developed by the Saudi Aramco Development Company, which also optimises Saudi Aramco’s supply chain costs and improves its agility," said Ziad Al Murshed, the executive director of new business development at Saudi Aramco, and CEO of the Saudi Aramco Development Company.

"This investment will also create employment and training opportunities for Saudi youth.

“Over the past few years, Saudi Aramco has taken major steps to localise oilfield services in the kingdom, starting with drilling services, through establishing two rig operations joint ventures, one for onshore drilling and the other for offshore drilling.

The new joint venture with NOV will be located in Ras Al Khair, near the Jubail Industrial City on the kingdom’s east coast, and will serve as a major hub for high specification drilling rigs using cutting-edge technologies with a capacity to manufacture 10 onshore rigs per year, Aramco said.

Additionally, the facility will offer repair services and recertification of a large portfolio of equipment. The facility will also have the capabilities to supply drilling packages for offshore jack-up rigs. It will localise expertise in multiple disciplines related to onshore rig manufacturing